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NPV, DCF and the EBQ


Many organisations use the discounted cash flow rate of return, often known as the ‘internal’ rate of return, or DCF rate of return, as a criterion for choosing between alternative courses of action. The dangers of using this criterion independently of any consideration of the sum of the cash flows is illustrated by a simple example.

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Tate, T. NPV, DCF and the EBQ. J Oper Res Soc 28, 747–748 (1977).

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